A Reminder That UMich Inflation Expectations Are Completely Useless

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by Tyler Durden
Friday, Nov 24, 2023 - 12:10 PM

By Mark Cudmore, Bloomberg Markets Live reporter and strategist

The inflation expectations reading from the University of Michigan is again being cited as a relevant input. It’s not. Anyone who is allowed to touch any of the real buttons in a trading room should ignore it.

It’s completely useless, not just as a guide to levels, but even directionally. No amount of data-mining can validate any useful signal from the reading since the inflation regime changed several years ago.

Let’s blame quiet markets and the focus on Thanksgiving to give offenders a pass this time. If forced to write on markets today, there’s going to be some straw-clutching.

Here’s an updated overlay chart of US CPI versus where the University of Michigan survey said they would be one year prior; there is zero informational value from that data: